Industrial Sector Ideas

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Trex - >>> Operating in more of a niche within the home improvement space, Trex (TREX) produces composite decking material that has become a very popular alternative to wood. In fact, Trex has reached "verb status" for many who refer to any non-wood deck as a "Trex deck".


https://www.fool.com/investing/2023/03/15/3-growth-stocks-to-buy-now-if-interest-rates-remai/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article


Trex also appeals to consumers interested in environmental issues. Trex decking is comprised of a blend of scrap wood fibers and recycled polyethylene film. Trex can use these scrap products that would otherwise be filling landfills to create beautiful decking.

Despite the potential tailwind of more homeowners opting for improvement projects over moving, Trex products are more expensive than wood, so there's a potential that a slowing economy presents a challenge for the company. However, management spent the past year rightsizing its inventory and expenses and began to see results in Q4 2022 as its gross margin improved to 34.1%, up from 38.9% in the year-ago quarter.

2023 could be a challenging year for the company, but there's reason to buy now for the long term. Trex is still the leader in non-wood decking, and much like Home Depot and Target, it also reduced its shares outstanding by more than 20% over the past 10 years. Trex has been a long-term market-beating investment, and is positioned to remain one over time.

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